The Federal Reserve voted unanimously to raise interest rates by a quarter point Wednesday, the tenth rate hike since the central bank started its battle against inflation last March.
The move comes amid ongoing fragility in the banking sector triggered partly by higher interest rates, and following the collapse of three regional banks. Markets had anticipated the rate hike, and remained fairly muted after the Fed’s announcement.
The quarter-point increase brings the benchmark federal funds rate to a level of 5%-5.25%, its highest level in more than 15 years.
The Fed’s post-meeting statement re-emphasized the central bank’s commitment to bringing down inflation, but did not include a notation that “some additional policy firming may be appropriate,” which was included in its prior release. That omission leaves open the possibility for an upcoming pause in rate hikes.
With regard to timing of that pause, Fed Chair Jerome Powell said at his post-meeting press conference that the central bank would “approach that question at the June meeting.”
The Fed also noted that tougher lending standards are likely to slow the economy, which could help the central bank achieve its targeted inflation goal.
“Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring and inflation,” the statement said. “The extent of those effects remains uncertain.”
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